Ann: Trading Halt, page-45

I reckon that 99% of people punting stocks today have never seen what happens to operating leverage in inflationary environments.


"Seemingly you're totally correct, their products are on sale wherever one looks and it's hurt the brand."

If products are on perpetual sale, then brand value is clearly not remotely meaningful.



With the possible exception of SGH I can't recall such a complete own goal and dramatic company capitulation (of a seemingly relatively decent underlying business) in such a short period of time.

Not really an own goal, but a limited business model, which is "seemingly decent" under only certain limited favourable economic conditions, but when there is a break out of desperate scratching and clawing for supply chain margin, then this sort of low-moat consumer distribution business is always the first to cop it.

This is a catch-and-pass company which has no ability to dictate what it has to pay for the "catch" and no ability to set the price at which it "passes".

Ergo, crunched margin.

Even inflation is benign, the rule book says to be wary of consumer distribution businesses.

When inflation is raging - like it is now - if a business doesn't have the power to price, run away fast because that business is sure to get torpedoed.


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